Judge: Michael P. Linfield, Case: 23STCV26250, Date: 2024-04-02 Tentative Ruling
Case Number: 23STCV26250 Hearing Date: April 2, 2024 Dept: 34
SUBJECT: Demurrer
Moving Party: Defendant
Razmik Abkarians
Resp. Party: Plaintiff Blaine Ikeda
The Demurrer is OVERRULED.
BACKGROUND:
On October 26, 2023, Plaintiff Blaine Ikeda filed their
Complaint against Defendant Razmik Abkarians on causes of action of fraud,
conversion, breach of fiduciary duty, and accounting.
On January 18, 2024, Defendant filed his Demurrer.
On March 4, 2024, Plaintiff filed their Opposition.
On March 6, 2023, Defendant filed their Reply.
ANALYSIS:
I.
Legal
Standard
“The party
against whom a complaint or cross-complaint has been filed may object, by
demurrer or answer as provided in Section 430.30, to the pleading on any one or
more of” various grounds listed in statute. (Code Civ. Proc., § 430.10.)
“When any ground
for objection to a complaint, cross-complaint, or answer appears on the face
thereof, or from any matter of which the court is required to or may take
judicial notice, the objection on that ground may be taken by a demurrer to the
pleading.” (Code Civ. Proc., § 430.30, subd. (a).)
“A demurrer to a
complaint or cross-complaint may be taken to the whole complaint or
cross-complaint or to any of the causes of action stated therein.” (Code Civ.
Proc., § 430.50, subd. (a).)
“In reviewing the sufficiency
of a complaint against a general demurrer, we are guided by long-settled rules.
We treat the demurrer as admitting all material facts properly pleaded, but not
contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially
noticed. Further, we give the complaint a reasonable interpretation,
reading it as a whole and its parts in their context.” (Blank v. Kirwan (1985)
39 Cal.3d 311, 318, citations and internal quotation marks omitted.)
II.
Discussion
Defendant demurs to the first two causes of action in the Complaint.
A.
Fraud
1.
Legal
Standard
“The elements of fraud are (a) a
misrepresentation (false representation, concealment, or nondisclosure); (b)
scienter or knowledge of its falsity; (c) intent to induce reliance; (d)
justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town
Ctr. (2005) 135 Cal.App.4th 289, 294.)
The facts constituting the alleged fraud must
be alleged factually and specifically as to every element of fraud, as the
policy of “liberal construction” of the pleadings will not ordinarily be
invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)
To properly allege fraud against a
corporation, the plaintiff must plead the names of the persons allegedly making
the false representations, their authority to speak, to whom they spoke, what
they said or wrote, and when it was said or written. (Tarmann v. State Farm
Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)
2.
Discussion
Defendant demurs to the first cause of action for fraud, arguing: (1)
that there could not have been reliance here; and (2) that there is no
allegation of third-party involvement. (Demurrer, pp. 6:18–21.)
The Court disagrees with these arguments.
Plaintiff alleges that there was reliance on Defendant’s affirmative
obligation to disclose diversion of funds but that the diversion of funds was
not disclosed and was instead concealed. (Complaint, ¶¶ 11–13, 19–22.) For the
purposes of a demurrer, the Court must assume the truth of the allegations made
in the pleading.
Further, the Court is unaware of any requirement that there be
allegations of third-party involvement for a cause of action for fraud.
The Demurrer is OVERRULED to the first
cause of action for fraud.
B.
Conversion
1.
Legal
Standard
“Conversion is the wrongful exercise of dominion over the
property of another. The elements of a conversion claim are: (1) the
plaintiff’s ownership or right to possession of the property; (2) the defendant’s
conversion by a wrongful act or disposition of property rights; and (3)
damages.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)
“It is not necessary that there be a manual
taking of the property; it is only necessary to show an assumption of control
or ownership over the property, or that the alleged converter has applied the
property to his own use. Money can be the subject of an action for conversion
if a specific sum capable of identification is involved. Neither legal title nor
absolute ownership of the property is necessary. A party need only allege it is
entitled to immediate possession at the time of conversion. However, a mere
contractual right of payment, without more, will not suffice.” (Farmers Ins.
Exch. v. Zerin (1997) 53 Cal.App.4th 445, 451–52 [cleaned up].)
2.
Discussion
Defendant demurs to the second cause of action for conversion, arguing:
(1) that improper salaries, draws, and loans cannot support a cause of action
for conversion; and (2) that Plaintiff has not pleaded any entitlement to a
specific, identifiable sum of money. (Demurrer, pp. 7:10–12, 8:21.)
The Court again disagrees with these arguments.
Plaintiff alleges, inter alia, that: (1) the Parties each own a 50%
ownership interest in the corporate entity; (2) Defendant diverted funds from
the corporate entity in the amount of $907,530.97; and (3) these diversions
were not authorized. (Complaint, ¶¶ 4, 11–13, 1528–30.)
Unlike an action for back pay or failure to pay certain amounts under a
contract, the diversion of property (including money) that was not authorized
can be the subject of a cause of action for conversion. That is the case here.
Furthermore, Plaintiff did identify in the pleading a specific sum of money.
The Demurrer to the second cause of action for conversion is OVERRULED.
III.
Conclusion
The Demurrer is OVERRULED.